Start-up Loan

Companies that are in early stages are massive risks for potential investors as you have no evidence that your business will succeed which makes it very risky. However, the government has launched a start-up loan scheme which helps a business with a small loan. This loan is perfect for small businesses that are just starting out. One of the benefits of getting a start-up loan is that there is free mentorship for the upcoming entrepreneurs.

Usually, start-up loan schemes give you £10,000 in funds but those who are looking to grow further, can get up to £25,000. One detail that young entrepreneurs need to look out for is that the money that you borrow, you are responsible for it and not your company. Making sure that you read all the paperwork is essential.

Government Grants

The U.K government provides opportunities for small businesses with a small grant who are supporting economic growth in a specific part of the nation or a particular area. To get the government grant you need to meet their specific requirements and then you will need to go through a process which can be very time consuming. However, if you do manage to get access to the grant then you will essentially be able to use that money for your business without worrying about paying the loan back as it is not required.

Crowdfunding

Crowdfunding is becoming more and more popular as a way of financing which allows you to start a campaign to raise funds from different investors. There are two types of campaigns you can run; one is where you can exchange money for a small investment or exchange cash for rewards within their company.

Venture Capital

Venture capital is finance that is not necessarily for all entrepreneurs. Venture capitalists are looking for businesses that have a high growth potential in categories such as biotechnology, technology, and communications. With venture capital, the investors take an equity position within your business which allows them to do more risky projects. To make your business very successful, venture capitalists may hire expertise who will make sure that your project succeeds.

Hire Purchase

Hire purchase is a form of finance that allows businesses to extend the cost of an asset over a longer period of time. The provider will agree to purchase the asset for the business for a down payment, usually 5% – 10% of the value of the purchased asset. The business then must repay the remaining value of the assets in instalments over a period of time.

 

Commercial Mortgages

Commercial mortgages are a perfect financial option for those who are seeking funds for property investments. With commercial mortgages, it allows you to get more than 75% of the value of a property and 65% value of the property if you are looking to generate rental income. Commercial mortgage is a high-risk financial venture as the interest rate is really high and if you are unable to pay the mortgage then you will lose the property. This is very similar to a secured loan where you lose possession of assets or property if you cannot pay back the loan or mortgage.

Angel Investors

Angel investors are private investors who are looking for ways to invest their money into small or new businesses in return for a share in their business. Angel investors usually invest anywhere from £10,000 to £100,000 into small businesses.

Bank Loans

Bank loans are the most common funding options for SME (small and medium-sized enterprises). Different banks offer different funding options. Some may provide more capital or better personalized services but in general it’s a good idea to speak to a bank about funds for your business.

You need to make sure that you have a clear business plan with a good credit record as some will not entertain, if you don’t have a good track record of your business or credit record. If you want to increase your chance of getting a loan from a bank, then it’s essential to prepare a solid business plan. It is important that you acquire all the necessary details from the bank such as interest rate, repayment term and their best offer that suits your business.